The Fed’s Last “Rate Hike”

 

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June 14, 2017
Table of Contents
From David’s Desk
Andy Hoffman’s Daily Thoughts
Interviews and Appearances
David’s Favorite Articles
Market Recap
About Miles Franklin

From David’s Desk

Mr. David Schectman

I have that feeling once again. In the fall of 1987 I felt that the probability of a stock market crash was high. And so it came to pass. I had the same feeling in 1999 and was right once again. Leading up to 2008 was, as Yogi Berra brilliantly stated, “It’s deja vu all over again.” Well, dear readers, I have that same feeling once again. Will I go four for four? Don’t bet against it. Here is just a smattering of the current thinking on our overvalued stock market.
 
A Record Number Of Market Participants Says The Market Is Overvalued, Surpassing 1999 Bubble Highs
 
The latest monthly Fund Managers (FMS) survey from Bank of America is out, and continuing the trend noted in previous months when the number of active managers who said that stocks are overvalued hit the highest in nearly two decades, the latest version reveals that the number of respondents saying that equities are overvalued has just hit a record high, surpassing the all time high set during the 1999 bubble.
 
The Savviest Bond Investor Ever Just Issued His Most Serious Warning Yet
 
Practically every investor has heard of Bill Gross. For decades he was the head of PIMCO and ran the world’s largest bond fund. His specialty was U.S. Treasury debt, but he was equally adept at mortgages, emerging markets debt, and corporate debt as circumstances demanded. PIMCO was always a “bigfoot” in the bond marketplace. In the 1980s and 1990s, I was chief credit officer at a major U.S.

Treasury bond dealer, one of the so-called “primary dealers” who get to trade directly with the Federal Reserve open market operations trading desk. PIMCO had dedicated lines and a dedicated sales team at our firm. When they called to buy or sell, it would move markets. Every primary dealer wanted to be the first firm to get the call. Gross is famous for outperforming major bond indices by a wide margin. The way to do that is market timing. If you sell bonds just ahead of a rising rate environment, and buy them back when the Fed is ready to reverse course you not only capture most of the coupon and par value at maturity, you can book huge capital gains besides. No one reads the market better than Bill Gross. So, when he issues a warning, investors are wise to pay attention. This article has one of Gross’s most stark warnings yet. He says that market risk levels today are higher than any time since just before the 2008 panic. We all know what happened then. Gross says it could happen again, and soon.

 
  
“Today seems like late 1999. We haven’t seen the peak yet…. I expect the FANG stocks and the Nasdaq to have a big selloff. They could easily fall 30% or 40%.”
Last week I wrote that the central banks are supporting the stock markets and asked the question, “How can they ever sell their stock and bond portfolio without tanking the economy and the stock market?” The answer is, they can’t. Last night I stumbled upon the following article by SRSrocco that covers the same territory, but in depth. It is worthy of a place at the front of this daily in my section.

Are Massive Central Bank Purchases A Last Ditch Attempt To Save The Economy & Cap Gold Price?

 
The Central banks bought a staggering $1.5 trillion in assets in the first five months of the year to keep the economy from imploding while at the same time, capping the gold price.  Yes, it’s true…. $300 billion a month of Central bank asset purchases pushes up STOCK, BOND and REAL ESTATE values while it depresses or caps the gold (or silver) price.
The amount of Central bank asset purchases are now reaching insane levels.  And they have to.  It is the same thing as being a drug addict.  Once, someone starts down the road of drug addiction, it takes more and more of the drug to reach the same effect.  Thus, when Central banks started purchasing assets to prop up the market, they have to continue, and they have to continue buying even more.
In a previous article, I published this chart showing Central bank asset purchases up until the first four months of 2017:
This chart came from a Zerohedge article that showed the Central banks purchased $1 trillion in assets in just the first four months of 2017, and the total of their balance sheets reached $14.6 trillion.  In just five years, Central banks purchased $7 trillion in assets.  However, in the first four months of 2017, they ramped it up to $1 trillion.  Which means, the Central Bank asset purchases could reach $3.6 trillion annualized in 2017, surpassing half of all official purchases in the past five years.
 
That’s a lot of PROPPING UP folks…. and it also has totally depressed and capped the gold price.   But, not for long.
However, before I get into some really interesting charts on just how crazy things are getting in Central bank land, I would like to share some of my sentiments about what is taking place in the Good ‘ole U.S. of A.

BRAIN DAMAGE & INSANITY Have Taken Root In America

Unfortunately, many Americans are now suffering from increased levels of insanity and brain damage… and it’s only getting worse.  That being said, I really can’t blame them.  Everyday most Americans, from sunup to sundown, receive a constant flow of Mainstream media advertising and propaganda.  And it’s even more damaging for the little tots and kids.
From infancy to adolescence, kids receive a tremendous amount of brainwashing via the TV, I-phone and Internet.   When a tiny tot is sitting in front of a TV all day watching someone named Sparky the clown telling the child to eat sugar loaded with a smattering of cereal, this is the first step in turning that infant into an attention-deficit hyper-active kid that will not only drive his-her mother and father completely insane, but also all the teachers and public that has to deal with this wonderful child in the future.
As the child grows up, it now needs a lot of sugar or the screaming starts.  I know of this first hand when I travel on the road and stop at one of the newer Mega-Travel-Stops on the interstate.  Maybe some of you have been into one of these new Mega-Travel-Stops that have RV & Big Truck fuel pumps along with 100 gas pumps for regular cars and trucks.
On a busy travel weekend, I would recommend anyone who hasn’t visited one of these fine establishments, to take a bit of time out of your day… to do so.  When you get in there, it can be complete CHAOS.  Of course, there are many fully wired adults and lots of screaming kids looking for their junk food fix.  I have seen some kids grab bags of chips, take them to their parents standing in line at the checkout counter… and when the parent said no, the kid took the bag and threw it back on the wrong place on the shelf.  Many times the bag fell on the floor, and the parent did the RIGHT THING… and ignored it… LOL.
I gather if you apart of the mass exodus of families out of the suburbs on the weekend get-a-way, this may seem normal… the CHAOS, ya know.  Basically, these Mega-Travel-Stops are frogs boiling in the water and no one seems to notice, and no one seems to care.
Anyhow… after Americans spend top dollar just to live in a McMansion or some other shoddy built suburban home, with all the bells and whistles, they have to spend even more money to GET AWAY FROM IT ALL during the weekend.  Of course, this makes perfect sense when we have gone completely insane.
 
Think about this for a minute.  Many Americans spend 40-60 hours during the week to afford the dream home with white picket fence in the suburbs, located six feet from their neighbor, but as soon as Friday rolls around, they grab the kids, the RV and get out of there AS FAST AS POSSIBLE.
So, this is our new economy.  Americans working jobs they hate, to buy a house they can’t wait to leave just as soon as the weekend arrives.  And all of this is being propped up by massive amount of debt and Central bank asset purchases.
That’s the insanity.  Now, let’s discuss the brain damage.
Brain damage impacts Americans in different ways.  However, the majority who have the illness, don’t realize they are inflected.  So, they continue on their marry life, not realizing the brain damage is getting even worse.
So, what do I mean by brain damage?  It’s quite simple.  A person who suffers from brain damage, actually believes a new Credit Card in the mail is a like winning a small lottery.  Thus, they are able to go out and buy more garbage and crap to fill up an already stuffed house or rental storage facility.  Brain damaged Americans no longer understand THRIFT, FRUGALITY or PRUDENCE.
Rather, Americans are racing 70 mph down the interstate, spending money they don’t have on lots of screaming kids, just to get away from it all.  And it gets even worse.  No, I am not kidding.
In the past, I have tried to share some of what I know about the economic and financial insanity to family and friends, but the response was normally the same, THAT I WAS LOSING MY MIND, and… “Don’t worry… Everything is Fine.”  You see, when someone has severe brain damage, they believe BAD is GOOD, WRONG is RIGHT, DEBTS are ASSETS and so on and so forth.
 
Lastly, when someone responds by saying, “Gold is just a Barbarous Relic”, well then… you know the BRAIN DAMAGE is now irreversible.  The poor slob is past the point of no return… and is not curable.  All we can do is keep our mouths shut during holiday get-to-togethers, eat the junk food and hope and pray there aren’t too many screaming kids.
Okay… enough of my rant.  Let’s get back to the good stuff.

Central Bank Asset Purchases & Their Impact On Gold

As I mentioned in the beginning of the article, Central Banks purchased $1 trillion of assets in just the first four months of the year.  However, they did one better as they added another half trillion in May… LOL:
So, the total for the first five months of the year is a staggering $1.5 trillion.  Also, we can see that the Central bank balance sheet is now $15.1 trillion, up from $3.5 trillion before the 2008 U.S. Housing Market and Banking collapse.
If we compare the Central bank balance sheet as a percentage of GDP, we have the following wonderful chart:
If we are not suffering from brain damage, we can clearly see here that Central banks balance sheets now account for nearly 40% of GDP.  The reason the total Central bank balance sheet in the chart above is higher than the previous chart, is that this one includes China’s official bank balances (PBOC).  If the Central banks balance sheets now account for 40% of GDP, well then, we are in serious trouble when the punch bowl is taken away.
Also, according to a recent Zero Hedge article, “Nothing Else Matters”: Central Banks Have Bought A Record $1.5 trillion In Assets In 2017, they republished the chart below and stating the following:
The latest data means that contrary to previous calculations, central banks are now injecting a record $300 billion in liquidity per month, above the $200 billion, which Deutsche Bank recently warned is a “red-line” indicator for risk assets.
 
If Deutsche Bank warned of a “RED-LINE” for risk assets at the $200 billion a month for Central bank asset purchases, than what in the hell is going on when they are now buying $300 billion a month??  And how much is $300 billion a month??  It’s quite a lot when we look at the following chart below:
As the Central banks purchased an average of $300 billion a month in assets to prop up the markets, it totally overshadows the $10.7 billion a month of global gold mine supply (based on spot price of $1,250).  Thus, Central bank monthly asset purchases are 28 times more than the value of the global gold mine supply.  This is totally insane when we realize gold is still a monetary asset on Central banks balance sheets.
 
However, it is even more incredible when we compare Central bank asset purchases for the first five months of 2017 versus gold:
According to the data I published in my article, How High Will Silver’s Value Increas Compared To Gold During The Next Crisis?, total global gold investment is approximately $3 trillion.  That’s everything, which includes Central Bank gold inventories, and all large and small public-private gold holdings.
 
So, we can plainly see in the chart above, that $1.5 trillion in Central banks asset purchases in just the first five months of the year would have bought HALF of all Global Gold Investment.  I repeat… HALF OF ALL GLOBAL GOLD INVESTMENT.
 
Which brings me to the subject of “Frustrated Precious Metals Investors.”  I continue to see precious metals investors who are extremely frustrated by the so-called “WRONG CALLS” by the analysts on the gold and silver price movements.  Yes, it is true that many of us didn’t realize the degree in which the Central banks would go to prop up the markets… but this is getting completely insane now.
If the Central banks were to stop purchasing assets… then the markets would collapse.  Heck, they are trying to collapse even with the massive Central bank intervention.  The signs are everywhere.
Folks, without the over $12 trillion in Central bank asset purchases since the 2008 U.S. Housing Market and Banking collapse, the gold price would have been stunningly higher… so would the silver price.
 
This brings me to an excellent comment that gold analyst Jim Rickards made in a recent interview.  He said that the 1998 Long Term Capital Management Hedge Fund collapse, that nearly took down the entire system, was bailed out by the Financial Banks (16 financial institutions bailed out LTCM).  When the financial banks were in BIG TROUBLE in 2008, the Central banks bailed them out.
However… who is going to bail out the Central banks when they get into trouble???  And they are getting into serious trouble.  Unfortunately, there is no one left to bail out the system when the Central banks finally lose control.
 
If the Central banks try to pull back on asset purchases, then the market will start to do a NOSE-DIVE.  This would likely motivate them to come back in with ALL GUNS BLASTING.  So, pay attention to the increase in Central bank asset purchases as a clue to know when they are becoming desperate.
This massive increase in Central bank asset purchases is a last ditch effort to prop up the market and cap the gold price.  While they may have more propping up to do, they will likely have to increase their level of buying even more.  As it goes exponential… then we know the END IS NEAR.

According to the data I published in my article, How High Will Silver’s Value Increase Compared To Gold During The Next Crisis?, total global gold investment is approximately $3 trillion.  That’s everything, which includes Central Bank gold inventories, and all large and small public-private gold holdings.

So, we can plainly see in the chart above, that $1.5 trillion in Central banks asset purchases in just the first five months of the year would have bought HALF of all Global Gold Investment.  I repeat… HALF OF ALL GLOBAL GOLD INVESTMENT.
Which brings me to the subject of “Frustrated Precious Metals Investors.”  I continue to see precious metals investors who are extremely frustrated by the so-called “WRONG CALLS” by the analysts on the gold and silver price movements.  Yes, it is true that many of us didn’t realize the degree in which the Central banks would go to prop up the markets… but this is getting completely insane now.
If the Central banks were to stop purchasing assets… then the markets would collapse.  Heck, they are trying to collapse even with the massive Central bank intervention.  The signs are everywhere.
Folks, without the over $12 trillion in Central bank asset purchases since the 2008 U.S. Housing Market and Banking collapse, the gold price would have been stunningly higher… so would the silver price.
This brings me to an excellent comment that gold analyst Jim Rickards made in a recent interview.  He said that the 1998 Long Term Capital Management Hedge Fund collapse, that nearly took down the entire system, was bailed out by the Financial Banks (16 financial institutions bailed out LTCM).  When the financial banks were in BIG TROUBLE in 2008, the Central banks bailed them out.
However… who is going to bail out the Central banks when they get into trouble???  And they are getting into serious trouble.  Unfortunately, there is no one left to bail out the system when the Central banks finally lose control.
If the Central banks try to pull back on asset purchases, then the market will start to do a NOSE-DIVE.  This would likely motivate them to come back in with ALL GUNS BLASTING.  So, pay attention to the increase in Central bank asset purchases as a clue to know when they are becoming desperate.
This massive increase in Central bank asset purchases is a last ditch effort to prop up the market and cap the gold price.  While they may have more propping up to do, they will likely have to increase their level of buying even more.  As it goes exponential… then we know the END IS NEAR. – SRSrocco
David’s Favorite Articles
 
Jim Sinclair (The flash crash of all time is headed our way)
Mike Savage (Paying off the bankers)

Andy Hoffman’s Daily Thoughts

Mr. Andy Hoffman

Today, let’s start with one of my “favorite” topics, given my strong belief that OPEC’s highly visible death throes presage the epic level of chaos the gold Cartel will eventually experience when it spectacularly fails – per what I wrote in last month’s “OPEC, like the London Gold Pool, proving Cartel’s always fail.”  To that end, no blog I am aware of – outside of those focused principally on energy – has expended more digital ink on this topic – given how confident that, contrary to the all-time high long position Wall Street took in crude oil futures earlier this year, the “production cut” required to save not only the energy industry, but countless sovereign nations, would miserably fail, no matter how much propaganda and market manipulation was expended to create the perception of “balance,” amidst history’s worst – and likely, irreversible – crude oil glut.

This morning, it was reported that OPEC’s May crude oil production – the very month they extended the initial, completely futile six-month “cut” by an additional nine months – rose by a whopping 336,000 barrels per day, to its highest rate of 2017.  Non-compliance was a major factor; and now that head OPEC bully Saudi Arabia has all but declared war on Qatar for no apparent reason – other than its strong allegiance with Saudi’s mortal enemy, Iran – future compliance will unquestionably be lower.  However, the biggest contributing factor to May’s production surge – if you believe a word these lying, thieving lowlifes say – is the “restoration of lost supply from members exempt from the initial Vienna deal”; like Iran, Libya, and Nigeria.  In other words, they – and Iraq, which is NOT exempt – are doing exactly what they said they would do; which is exactly why said “deal” was such a farce to start with.  And consequently, why the energy sector is about to cause an unfathomable amount of pain in the political, economic, social, monetary, and perhaps military spheres.

Which in turn, will give Central banks the perfect “deflationary” excuse to extend – and expand – their hyper-inflationary monetary policies ad infinitum, in perfect synchronization with the mandate of their fiat Ponzi schemes.  This is exactly what Goldman Mario blamed on his decision to lower the ECB’s short- and long-term inflation expectations last week; i.e, taking Central bank credibility to a new all-time low; and will give Janet Yellen yet another quiver in her money printing arrow when the FOMC meets today and tomorrow.  Heck, oil price.org just published an article titled “low interest rates have postponed peak oil,” demonstrating why the inescapable feedback loop of low oil prices, low inflation expectations, and low interest rates – not to mention, dramatic technology advances – will continue to add to the glut for the foreseeable future.

Furthermore, with each successive OPEC failure, the inevitable collapse of the dying “petrodollar” moves one giant step forward.  Frankly, it couldn’t be more obvious that America values its rapidly deteriorating relationship with Saudi Arabia ahead of nearly all others, given that it provides a) a steady source of oil; b) a strategic Middle Eastern ally; c) a “point man” to coordinate its relentless Middle East wars; and d) a steady demand for fiat dollars, to purchase Saudi crude.

In my mind, this is the primary reason Saudi Arabia was a top contributor to the Clinton Foundation; and why, despite blatantly anti-Saudi campaign rhetoric, Donald Trump feted Saudi Arabia’s criminal “princes” last month, lavishing them with a record arms contract so they can wage war on whomever their puppet masters at the Pentagon choose.  Moreover, it is clearly the principal reason why an ad hoc “oil PPT” was created last year when prices plunged, given that Saudi Arabia’s finances – even at $50/bbl oil – are rapidly deteriorating; yielding the dire, desperate need to IPO a $100 billion stake in Saudi Aramco later this year.  Which, with each passing day, appears more and more unlikely.  To that end, I have always viewed Saudi Arabia as a “political Apartheid” society – in which a handful of sociopathic, money-hungry “leaders” ally themselves with the “Great Satan” America, against the wishes of the vast majority of U.S.-hating citizens.  It can only end badly – very badly; and in my view, will do so, very soon.

Just as will be the case with U.S. “monetary policy,” on this eve of yet another Keystone Kops FOMC meeting, when Whirlybird Janet issues the Fed’s last “rate hike” of her soon-to-end tenure; and potentially, the last “tightening” before the inevitable arrival of the “bond vigilantes” forces her to do so, into extreme economic weakness and political strife.  Which is saying a lot, given that the past decade’s (accounting enhanced) GDP “growth” was identical to the 1930s, despite the $15-plus trillion of debt piled on to individuals – as evidenced by total household debt hitting a new all-time high last month; institutions; municipalities – like the State of Illinois, which appears likely to declare bankruptcy sooner rather than later; corporations – which now have more debt than at any time in U.S. history; and of course, the Federal government itself.

Everywhere one looks, evidence that even the minuscule “rate hikes” that took the Fed Funds rate from its eight-year convalescence at ZERO to the current level of 0.87%, 18 months after the first “rate hike” – which just happened to coincide with Precious Metals’ ultimate bottom; suggests the result of this ill-beggotten policy has been miserable, expanding failure.  As not only have said “hikes” decimated already overburdened debt loads – giving way to exploding auto, student, and credit card delinquencies and defaults; but they have further exposed how historically overvalued Central bank “supported” stock and bond markets have become, as well as the real estate markets that piggy back off them; i.e., “dotcom valuations in a Great Depression Era.”

To wit, despite the supposedly “strong, growing” economy – featuring barely positive GDP, and collapsing hard data of all kinds – the CRB Commodity Index is breaking below support levels going all the way back to the start of 2016, when said “oil PPT” was established in a desperate effort to prop up the CRB’s most heavily weighted component (which in February 2016, bottomed at $26/bbl); and in the process, save its despotic, murderous, Petrodollar-processing “ally,” Saudi Arabia.
Moreover, delinquencies, defaults, and bankruptcy filings are exploding, whilst year-over-year loan growth is about to go negative for the first time since the 2008 crisis; and as we learned yesterday, barely a quarter of all U.S. businesses are in the black.  The U.S. government budget, also reported yesterday, is exploding higher, too – before tomorrow’s “rate hike” is even announced.  Much less, the “tax cuts” and “infrastructure spending” components of the dead and buried “Trump-flation” meme; which, as I vehemently predicted two days after the election, have not a chance of occurring anyway.  Which, if against all odds were actually enacted, would practically speaking, make the budget and debt situations far worse.  Throw in the imminent, and likely massive “debt ceiling” increase coming this summer – which just yesterday, “Slimebag Steve” Mnuchin practically begged for ahead of Congress’ upcoming August recess; and the inexorabl plunge in retail sales; corporate capital expenditures; and even housing permits, starts, and sales; and you can see why tomorrow’s “rate hike” – which the Fed is only enacting because the PPT has been able to boost the “Dow Jones Propaganda Average” to an all-time high bubble valuation – will clearly be the last.

However, of all the reasons why tomorrow’s “rate hike” will be the Fed’s last, none loom larger than the giant pink elephant in the room.  Which is, that for all the previous rate hikes, market “support,” and propaganda of great things to come, not only have real economic data and commodity prices relentlessly plunged, but so have actual, market-based interest rates!

The high of the benchmark 10-year Treasury yield, going all the way back to early 2014, was the oh-so-brief spike to 2.6% just after the election; and again, leading up to the March “rate hike,” before it promptly plunged to the roughly 2.2% it stands at today.  To that end, my “2.5%, ’nuff said” article of January 2017 – calling the top in the 10-year yield; is looking just as prescient as my similarly-themed “3.0%, ’nuff said” article of January 2014, in light of the fact that real world indicators suggest that not only is the current, historically ineffective “credit cycle” is at its end, but so is the Fed’s LOL, “tightening cycle” as well.  Yes, a “tightening cycle” – amidst a collapsing global economy – that will have taken 18 months to simply raise rates from 0% to 1%; the latter of which, even Maestro Greenspan never went below during his berserk rate-cutting crusade following the historic dotcom collapse – which he, more than any single person, personally fostered.  And if you don’t believe interest rates themselves, then look at the collapse of the yield curve post-Election Day, to nearly a new multi-year low – not just in the U.S., but all major Western nations.
In my view, the past week’s historic Precious Metal paper raids, amidst a veritable cornucopia of PiMBEEB news flow, was undertaken for two principal reasons.  First, to push gold back below its 5½ year downtrend line at roughly $1,274/oz, just as it approached the key psychological level of $1,300/oz; and silver, its 200-week moving average of $17.75/oz – both of which, were briefly achieved last Wednesday, before “someone” dumped $4 billion of “notional” paper gold on the COMEX Thursday morning – after the wildly dovish ECB statement, to catalyze the typical “spec” margin calls that lead to prototypical “waterfall declines.”  And equally important, to “prime” the market for tomorrow’s rate hike – yet again, trying to convince it this is “bad” for Precious Metals, despite not a shred of evidence to support the notion; or the fact that PMs surged after all three previous rate hikes.

In other words, I sense a significant opportunity to acquire “dirt cheap insurance” at today’s historically suppressed prices – of physical gold; silver; and the “forgotten Precious Metal,” per yesterday’s article title – platinum.

June 14, 2017

tableTable of Contents
From David’s Desk
Andy Hoffman’s Daily Thoughts
Interviews and Appearances
David’s Favorite Articles
Market Recap
About Miles Franklin

davidFrom David’s Desk
David Schectman
I have that feeling once again. In the fall of 1987 I felt that the probability of a stock market crash was high. And so it came to pass. I had the same feeling in 1999 and was right once again. Leading up to 2008 was, as Yogi Berra brilliantly stated, “It’s deja vu all over again.” Well, dear readers, I have that same feeling once again. Will I go four for four? Don’t bet against it. Here is just a smattering of the current thinking on our overvalued stock market.
 
A Record Number Of Market Participants Says The Market Is Overvalued, Surpassing 1999 Bubble Highs
 
The latest monthly Fund Managers (FMS) survey from Bank of America is out, and continuing the trend noted in previous months when the number of active managers who said that stocks are overvalued hit the highest in nearly two decades, the latest version reveals that the number of respondents saying that equities are overvalued has just hit a record high, surpassing the all time high set during the 1999 bubble.
 
The Savviest Bond Investor Ever Just Issued His Most Serious Warning Yet
 
Practically every investor has heard of Bill Gross. For decades he was the head of PIMCO and ran the world’s largest bond fund. His specialty was U.S. Treasury debt, but he was equally adept at mortgages, emerging markets debt, and corporate debt as circumstances demanded. PIMCO was always a “bigfoot” in the bond marketplace. In the 1980s and 1990s, I was chief credit officer at a major U.S.

Treasury bond dealer, one of the so-called “primary dealers” who get to trade directly with the Federal Reserve open market operations trading desk. PIMCO had dedicated lines and a dedicated sales team at our firm. When they called to buy or sell, it would move markets. Every primary dealer wanted to be the first firm to get the call. Gross is famous for outperforming major bond indices by a wide margin. The way to do that is market timing. If you sell bonds just ahead of a rising rate environment, and buy them back when the Fed is ready to reverse course you not only capture most of the coupon and par value at maturity, you can book huge capital gains besides. No one reads the market better than Bill Gross. So, when he issues a warning, investors are wise to pay attention. This article has one of Gross’s most stark warnings yet. He says that market risk levels today are higher than any time since just before the 2008 panic. We all know what happened then. Gross says it could happen again, and soon.

 
  
“Today seems like late 1999. We haven’t seen the peak yet…. I expect the FANG stocks and the Nasdaq to have a big selloff. They could easily fall 30% or 40%.”
Last week I wrote that the central banks are supporting the stock markets and asked the question, “How can they ever sell their stock and bond portfolio without tanking the economy and the stock market?” The answer is, they can’t. Last night I stumbled upon the following article by SRSrocco that covers the same territory, but in depth. It is worthy of a place at the front of this daily in my section.

Are Massive Central Bank Purchases A Last Ditch Attempt To Save The Economy & Cap Gold Price?

 
The Central banks bought a staggering $1.5 trillion in assets in the first five months of the year to keep the economy from imploding while at the same time, capping the gold price.  Yes, it’s true…. $300 billion a month of Central bank asset purchases pushes up STOCK, BOND and REAL ESTATE values while it depresses or caps the gold (or silver) price.
The amount of Central bank asset purchases are now reaching insane levels.  And they have to.  It is the same thing as being a drug addict.  Once, someone starts down the road of drug addiction, it takes more and more of the drug to reach the same effect.  Thus, when Central banks started purchasing assets to prop up the market, they have to continue, and they have to continue buying even more.
In a previous article, I published this chart showing Central bank asset purchases up until the first four months of 2017:

This chart came from a Zerohedge article that showed the Central banks purchased $1 trillion in assets in just the first four months of 2017, and the total of their balance sheets reached $14.6 trillion.  In just five years, Central banks purchased $7 trillion in assets.  However, in the first four months of 2017, they ramped it up to $1 trillion.  Which means, the Central Bank asset purchases could reach $3.6 trillion annualized in 2017, surpassing half of all official purchases in the past five years.
 
That’s a lot of PROPPING UP folks…. and it also has totally depressed and capped the gold price.   But, not for long.
However, before I get into some really interesting charts on just how crazy things are getting in Central bank land, I would like to share some of my sentiments about what is taking place in the Good ‘ole U.S. of A.

BRAIN DAMAGE & INSANITY Have Taken Root In America

Unfortunately, many Americans are now suffering from increased levels of insanity and brain damage… and it’s only getting worse.  That being said, I really can’t blame them.  Everyday most Americans, from sunup to sundown, receive a constant flow of Mainstream media advertising and propaganda.  And it’s even more damaging for the little tots and kids.
From infancy to adolescence, kids receive a tremendous amount of brainwashing via the TV, I-phone and Internet.   When a tiny tot is sitting in front of a TV all day watching someone named Sparky the clown telling the child to eat sugar loaded with a smattering of cereal, this is the first step in turning that infant into an attention-deficit hyper-active kid that will not only drive his-her mother and father completely insane, but also all the teachers and public that has to deal with this wonderful child in the future.
As the child grows up, it now needs a lot of sugar or the screaming starts.  I know of this first hand when I travel on the road and stop at one of the newer Mega-Travel-Stops on the interstate.  Maybe some of you have been into one of these new Mega-Travel-Stops that have RV & Big Truck fuel pumps along with 100 gas pumps for regular cars and trucks.
On a busy travel weekend, I would recommend anyone who hasn’t visited one of these fine establishments, to take a bit of time out of your day… to do so.  When you get in there, it can be complete CHAOS.  Of course, there are many fully wired adults and lots of screaming kids looking for their junk food fix.  I have seen some kids grab bags of chips, take them to their parents standing in line at the checkout counter… and when the parent said no, the kid took the bag and threw it back on the wrong place on the shelf.  Many times the bag fell on the floor, and the parent did the RIGHT THING… and ignored it… LOL.
I gather if you apart of the mass exodus of families out of the suburbs on the weekend get-a-way, this may seem normal… the CHAOS, ya know.  Basically, these Mega-Travel-Stops are frogs boiling in the water and no one seems to notice, and no one seems to care.
Anyhow… after Americans spend top dollar just to live in a McMansion or some other shoddy built suburban home, with all the bells and whistles, they have to spend even more money to GET AWAY FROM IT ALL during the weekend.  Of course, this makes perfect sense when we have gone completely insane.
 
Think about this for a minute.  Many Americans spend 40-60 hours during the week to afford the dream home with white picket fence in the suburbs, located six feet from their neighbor, but as soon as Friday rolls around, they grab the kids, the RV and get out of there AS FAST AS POSSIBLE.
So, this is our new economy.  Americans working jobs they hate, to buy a house they can’t wait to leave just as soon as the weekend arrives.  And all of this is being propped up by massive amount of debt and Central bank asset purchases.
That’s the insanity.  Now, let’s discuss the brain damage.
Brain damage impacts Americans in different ways.  However, the majority who have the illness, don’t realize they are inflected.  So, they continue on their marry life, not realizing the brain damage is getting even worse.
So, what do I mean by brain damage?  It’s quite simple.  A person who suffers from brain damage, actually believes a new Credit Card in the mail is a like winning a small lottery.  Thus, they are able to go out and buy more garbage and crap to fill up an already stuffed house or rental storage facility.  Brain damaged Americans no longer understand THRIFT, FRUGALITY or PRUDENCE.
Rather, Americans are racing 70 mph down the interstate, spending money they don’t have on lots of screaming kids, just to get away from it all.  And it gets even worse.  No, I am not kidding.
In the past, I have tried to share some of what I know about the economic and financial insanity to family and friends, but the response was normally the same, THAT I WAS LOSING MY MIND, and… “Don’t worry… Everything is Fine.”  You see, when someone has severe brain damage, they believe BAD is GOOD, WRONG is RIGHT, DEBTS are ASSETS and so on and so forth.
 
Lastly, when someone responds by saying, “Gold is just a Barbarous Relic”, well then… you know the BRAIN DAMAGE is now irreversible.  The poor slob is past the point of no return… and is not curable.  All we can do is keep our mouths shut during holiday get-to-togethers, eat the junk food and hope and pray there aren’t too many screaming kids.
Okay… enough of my rant.  Let’s get back to the good stuff.

Central Bank Asset Purchases & Their Impact On Gold

As I mentioned in the beginning of the article, Central Banks purchased $1 trillion of assets in just the first four months of the year.  However, they did one better as they added another half trillion in May… LOL:
So, the total for the first five months of the year is a staggering $1.5 trillion.  Also, we can see that the Central bank balance sheet is now $15.1 trillion, up from $3.5 trillion before the 2008 U.S. Housing Market and Banking collapse.
If we compare the Central bank balance sheet as a percentage of GDP, we have the following wonderful chart:
If we are not suffering from brain damage, we can clearly see here that Central banks balance sheets now account for nearly 40% of GDP.  The reason the total Central bank balance sheet in the chart above is higher than the previous chart, is that this one includes China’s official bank balances (PBOC).  If the Central banks balance sheets now account for 40% of GDP, well then, we are in serious trouble when the punch bowl is taken away.
Also, according to a recent Zero Hedge article, “Nothing Else Matters”: Central Banks Have Bought A Record $1.5 trillion In Assets In 2017, they republished the chart below and stating the following:
The latest data means that contrary to previous calculations, central banks are now injecting a record $300 billion in liquidity per month, above the $200 billion, which Deutsche Bank recently warned is a “red-line” indicator for risk assets.
 
If Deutsche Bank warned of a “RED-LINE” for risk assets at the $200 billion a month for Central bank asset purchases, than what in the hell is going on when they are now buying $300 billion a month??  And how much is $300 billion a month??  It’s quite a lot when we look at the following chart below:
As the Central banks purchased an average of $300 billion a month in assets to prop up the markets, it totally overshadows the $10.7 billion a month of global gold mine supply (based on spot price of $1,250).  Thus, Central bank monthly asset purchases are 28 times more than the value of the global gold mine supply.  This is totally insane when we realize gold is still a monetary asset on Central banks balance sheets.
 
However, it is even more incredible when we compare Central bank asset purchases for the first five months of 2017 versus gold:
According to the data I published in my article, How High Will Silver’s Value Increas Compared To Gold During The Next Crisis?, total global gold investment is approximately $3 trillion.  That’s everything, which includes Central Bank gold inventories, and all large and small public-private gold holdings.
 
So, we can plainly see in the chart above, that $1.5 trillion in Central banks asset purchases in just the first five months of the year would have bought HALF of all Global Gold Investment.  I repeat… HALF OF ALL GLOBAL GOLD INVESTMENT.
 
Which brings me to the subject of “Frustrated Precious Metals Investors.”  I continue to see precious metals investors who are extremely frustrated by the so-called “WRONG CALLS” by the analysts on the gold and silver price movements.  Yes, it is true that many of us didn’t realize the degree in which the Central banks would go to prop up the markets… but this is getting completely insane now.
If the Central banks were to stop purchasing assets… then the markets would collapse.  Heck, they are trying to collapse even with the massive Central bank intervention.  The signs are everywhere.
Folks, without the over $12 trillion in Central bank asset purchases since the 2008 U.S. Housing Market and Banking collapse, the gold price would have been stunningly higher… so would the silver price.
 
This brings me to an excellent comment that gold analyst Jim Rickards made in a recent interview.  He said that the 1998 Long Term Capital Management Hedge Fund collapse, that nearly took down the entire system, was bailed out by the Financial Banks (16 financial institutions bailed out LTCM).  When the financial banks were in BIG TROUBLE in 2008, the Central banks bailed them out.
However… who is going to bail out the Central banks when they get into trouble???  And they are getting into serious trouble.  Unfortunately, there is no one left to bail out the system when the Central banks finally lose control.
 
If the Central banks try to pull back on asset purchases, then the market will start to do a NOSE-DIVE.  This would likely motivate them to come back in with ALL GUNS BLASTING.  So, pay attention to the increase in Central bank asset purchases as a clue to know when they are becoming desperate.
This massive increase in Central bank asset purchases is a last ditch effort to prop up the market and cap the gold price.  While they may have more propping up to do, they will likely have to increase their level of buying even more.  As it goes exponential… then we know the END IS NEAR.

According to the data I published in my article, How High Will Silver’s Value Increase Compared To Gold During The Next Crisis?, total global gold investment is approximately $3 trillion.  That’s everything, which includes Central Bank gold inventories, and all large and small public-private gold holdings.

So, we can plainly see in the chart above, that $1.5 trillion in Central banks asset purchases in just the first five months of the year would have bought HALF of all Global Gold Investment.  I repeat… HALF OF ALL GLOBAL GOLD INVESTMENT.
Which brings me to the subject of “Frustrated Precious Metals Investors.”  I continue to see precious metals investors who are extremely frustrated by the so-called “WRONG CALLS” by the analysts on the gold and silver price movements.  Yes, it is true that many of us didn’t realize the degree in which the Central banks would go to prop up the markets… but this is getting completely insane now.
If the Central banks were to stop purchasing assets… then the markets would collapse.  Heck, they are trying to collapse even with the massive Central bank intervention.  The signs are everywhere.
Folks, without the over $12 trillion in Central bank asset purchases since the 2008 U.S. Housing Market and Banking collapse, the gold price would have been stunningly higher… so would the silver price.
This brings me to an excellent comment that gold analyst Jim Rickards made in a recent interview.  He said that the 1998 Long Term Capital Management Hedge Fund collapse, that nearly took down the entire system, was bailed out by the Financial Banks (16 financial institutions bailed out LTCM).  When the financial banks were in BIG TROUBLE in 2008, the Central banks bailed them out.
However… who is going to bail out the Central banks when they get into trouble???  And they are getting into serious trouble.  Unfortunately, there is no one left to bail out the system when the Central banks finally lose control.
If the Central banks try to pull back on asset purchases, then the market will start to do a NOSE-DIVE.  This would likely motivate them to come back in with ALL GUNS BLASTING.  So, pay attention to the increase in Central bank asset purchases as a clue to know when they are becoming desperate.
This massive increase in Central bank asset purchases is a last ditch effort to prop up the market and cap the gold price.  While they may have more propping up to do, they will likely have to increase their level of buying even more.  As it goes exponential… then we know the END IS NEAR. – SRSrocco
David’s Favorite Articles
 
Jim Sinclair (The flash crash of all time is headed our way)
Mike Savage (Paying off the bankers)

hoffmanAndy Hoffman’s Daily Thoughts
Andy Hoffman
Today, let’s start with one of my “favorite” topics, given my strong belief that OPEC’s highly visible death throes presage the epic level of chaos the gold Cartel will eventually experience when it spectacularly fails – per what I wrote in last month’s “OPEC, like the London Gold Pool, proving Cartel’s always fail.”  To that end, no blog I am aware of – outside of those focused principally on energy – has expended more digital ink on this topic – given how confident that, contrary to the all-time high long position Wall Street took in crude oil futures earlier this year, the “production cut” required to save not only the energy industry, but countless sovereign nations, would miserably fail, no matter how much propaganda and market manipulation was expended to create the perception of “balance,” amidst history’s worst – and likely, irreversible – crude oil glut.

This morning, it was reported that OPEC’s May crude oil production – the very month they extended the initial, completely futile six-month “cut” by an additional nine months – rose by a whopping 336,000 barrels per day, to its highest rate of 2017.  Non-compliance was a major factor; and now that head OPEC bully Saudi Arabia has all but declared war on Qatar for no apparent reason – other than its strong allegiance with Saudi’s mortal enemy, Iran – future compliance will unquestionably be lower.  However, the biggest contributing factor to May’s production surge – if you believe a word these lying, thieving lowlifes say – is the “restoration of lost supply from members exempt from the initial Vienna deal”; like Iran, Libya, and Nigeria.  In other words, they – and Iraq, which is NOT exempt – are doing exactly what they said they would do; which is exactly why said “deal” was such a farce to start with.  And consequently, why the energy sector is about to cause an unfathomable amount of pain in the political, economic, social, monetary, and perhaps military spheres.

Which in turn, will give Central banks the perfect “deflationary” excuse to extend – and expand – their hyper-inflationary monetary policies ad infinitum, in perfect synchronization with the mandate of their fiat Ponzi schemes.  This is exactly what Goldman Mario blamed on his decision to lower the ECB’s short- and long-term inflation expectations last week; i.e, taking Central bank credibility to a new all-time low; and will give Janet Yellen yet another quiver in her money printing arrow when the FOMC meets today and tomorrow.  Heck, oil price.org just published an article titled “low interest rates have postponed peak oil,” demonstrating why the inescapable feedback loop of low oil prices, low inflation expectations, and low interest rates – not to mention, dramatic technology advances – will continue to add to the glut for the foreseeable future.

Furthermore, with each successive OPEC failure, the inevitable collapse of the dying “petrodollar” moves one giant step forward.  Frankly, it couldn’t be more obvious that America values its rapidly deteriorating relationship with Saudi Arabia ahead of nearly all others, given that it provides a) a steady source of oil; b) a strategic Middle Eastern ally; c) a “point man” to coordinate its relentless Middle East wars; and d) a steady demand for fiat dollars, to purchase Saudi crude.

In my mind, this is the primary reason Saudi Arabia was a top contributor to the Clinton Foundation; and why, despite blatantly anti-Saudi campaign rhetoric, Donald Trump feted Saudi Arabia’s criminal “princes” last month, lavishing them with a record arms contract so they can wage war on whomever their puppet masters at the Pentagon choose.  Moreover, it is clearly the principal reason why an ad hoc “oil PPT” was created last year when prices plunged, given that Saudi Arabia’s finances – even at $50/bbl oil – are rapidly deteriorating; yielding the dire, desperate need to IPO a $100 billion stake in Saudi Aramco later this year.  Which, with each passing day, appears more and more unlikely.  To that end, I have always viewed Saudi Arabia as a “political Apartheid” society – in which a handful of sociopathic, money-hungry “leaders” ally themselves with the “Great Satan” America, against the wishes of the vast majority of U.S.-hating citizens.  It can only end badly – very badly; and in my view, will do so, very soon.

Just as will be the case with U.S. “monetary policy,” on this eve of yet another Keystone Kops FOMC meeting, when Whirlybird Janet issues the Fed’s last “rate hike” of her soon-to-end tenure; and potentially, the last “tightening” before the inevitable arrival of the “bond vigilantes” forces her to do so, into extreme economic weakness and political strife.  Which is saying a lot, given that the past decade’s (accounting enhanced) GDP “growth” was identical to the 1930s, despite the $15-plus trillion of debt piled on to individuals – as evidenced by total household debt hitting a new all-time high last month; institutions; municipalities – like the State of Illinois, which appears likely to declare bankruptcy sooner rather than later; corporations – which now have more debt than at any time in U.S. history; and of course, the Federal government itself.

Everywhere one looks, evidence that even the minuscule “rate hikes” that took the Fed Funds rate from its eight-year convalescence at ZERO to the current level of 0.87%, 18 months after the first “rate hike” – which just happened to coincide with Precious Metals’ ultimate bottom; suggests the result of this ill-beggotten policy has been miserable, expanding failure.  As not only have said “hikes” decimated already overburdened debt loads – giving way to exploding auto, student, and credit card delinquencies and defaults; but they have further exposed how historically overvalued Central bank “supported” stock and bond markets have become, as well as the real estate markets that piggy back off them; i.e., “dotcom valuations in a Great Depression Era.”

To wit, despite the supposedly “strong, growing” economy – featuring barely positive GDP, and collapsing hard data of all kinds – the CRB Commodity Index is breaking below support levels going all the way back to the start of 2016, when said “oil PPT” was established in a desperate effort to prop up the CRB’s most heavily weighted component (which in February 2016, bottomed at $26/bbl); and in the process, save its despotic, murderous, Petrodollar-processing “ally,” Saudi Arabia.

Moreover, delinquencies, defaults, and bankruptcy filings are exploding, whilst year-over-year loan growth is about to go negative for the first time since the 2008 crisis; and as we learned yesterday, barely a quarter of all U.S. businesses are in the black.  The U.S. government budget, also reported yesterday, is exploding higher, too – before tomorrow’s “rate hike” is even announced.  Much less, the “tax cuts” and “infrastructure spending” components of the dead and buried “Trump-flation” meme; which, as I vehemently predicted two days after the election, have not a chance of occurring anyway.  Which, if against all odds were actually enacted, would practically speaking, make the budget and debt situations far worse.  Throw in the imminent, and likely massive “debt ceiling” increase coming this summer – which just yesterday, “Slimebag Steve” Mnuchin practically begged for ahead of Congress’ upcoming August recess; and the inexorabl plunge in retail sales; corporate capital expenditures; and even housing permits, starts, and sales; and you can see why tomorrow’s “rate hike” – which the Fed is only enacting because the PPT has been able to boost the “Dow Jones Propaganda Average” to an all-time high bubble valuation – will clearly be the last.

However, of all the reasons why tomorrow’s “rate hike” will be the Fed’s last, none loom larger than the giant pink elephant in the room.  Which is, that for all the previous rate hikes, market “support,” and propaganda of great things to come, not only have real economic data and commodity prices relentlessly plunged, but so have actual, market-based interest rates!

The high of the benchmark 10-year Treasury yield, going all the way back to early 2014, was the oh-so-brief spike to 2.6% just after the election; and again, leading up to the March “rate hike,” before it promptly plunged to the roughly 2.2% it stands at today.  To that end, my “2.5%, ’nuff said” article of January 2017 – calling the top in the 10-year yield; is looking just as prescient as my similarly-themed “3.0%, ’nuff said” article of January 2014, in light of the fact that real world indicators suggest that not only is the current, historically ineffective “credit cycle” is at its end, but so is the Fed’s LOL, “tightening cycle” as well.  Yes, a “tightening cycle” – amidst a collapsing global economy – that will have taken 18 months to simply raise rates from 0% to 1%; the latter of which, even Maestro Greenspan never went below during his berserk rate-cutting crusade following the historic dotcom collapse – which he, more than any single person, personally fostered.  And if you don’t believe interest rates themselves, then look at the collapse of the yield curve post-Election Day, to nearly a new multi-year low – not just in the U.S., but all major Western nations.

In my view, the past week’s historic Precious Metal paper raids, amidst a veritable cornucopia of PiMBEEB news flow, was undertaken for two principal reasons.  First, to push gold back below its 5½ year downtrend line at roughly $1,274/oz, just as it approached the key psychological level of $1,300/oz; and silver, its 200-week moving average of $17.75/oz – both of which, were briefly achieved last Wednesday, before “someone” dumped $4 billion of “notional” paper gold on the COMEX Thursday morning – after the wildly dovish ECB statement, to catalyze the typical “spec” margin calls that lead to prototypical “waterfall declines.”  And equally important, to “prime” the market for tomorrow’s rate hike – yet again, trying to convince it this is “bad” for Precious Metals, despite not a shred of evidence to support the notion; or the fact that PMs surged after all three previous rate hikes.

In other words, I sense a significant opportunity to acquire “dirt cheap insurance” at today’s historically suppressed prices – of physical gold; silver; and the “forgotten Precious Metal,” per yesterday’s article title – platinum.

interviewInterviews
David’s Favorite Articles
Zero Hedge
 
“If you don’t own gold, you know neither history nor economics…”
 
Bill Gross warns U.S. market risk is at highest since 2008 crisis
 
June 10, 2017
 
As stocks continue their inexorable march deeper into uncharted territory, yet another prominent investor has joined the chorus of experts warning of a catastrophic end to the market’s hot streak.
 
Bill Gross, portfolio manager of the Janus Global Unconstrained Bond Fund, on Wednesday warned that the financial markets are at their most vulnerable since the 2008 financial crisis and investors are paying too high of a price for the risks that they are taking.
 
“Instead of buying low and selling high, you’re buying high and crossing your fingers,” said the bond guru, speaking at the Bloomberg Invest New York conference.
 
Jim Sinclair
 
The bust will be a series of flash crashes and recoveries until the flash crash of all time does not come back. After that the black hole rules.
 
‘Horrendous Storm’ To Hit Stocks, Wall Street Not Rational: David Stockman
June 11, 2027
 
If David Stockman is right, Wall Street should hunker down.
 
“This is one of the most dangerous market environments we’ve ever been in. It’s the calm before a gigantic, horrendous storm that I don’t think is too far down the road,” he recently said on “Futures Now.”
 
Stockman, who was director of the Office of Management and Budget under President Ronald Reagan, made his latest prediction after lawmakers grilled former FBI Director James Comey over whether President Donald Trump tried to influence the Russia investigation.
 
Mike Savage
 
Paying off the bankers
 
Later in the week we will find out if the Fed will raise rates as promised in June of 2017. Some reasons that there may be a question is that there are some ominous signs taking place all over the world as we speak.
 
There were many traders that were caught off guard on Friday afternoon as the stocks that have been giving the market the illusion of rising got hit hard- according to Gregory Mannorino (professional trader) “out of nowhere”.
 
I saw charts this morning where the “FANG” stocks have all breached their upward patterns. Time will tell if there is anything to this or if this is just another head fake while someone at the central banks was asleep at the switch. Or are they just changing what they are buying?
 
More telling, and easier to see are the problems that are besetting global banks. Here is a good one- the DOW was propped up by – Financials! (Banks) on Friday so the losses were not as dramatic in that index as in others.
 
Why is that so funny? There have been bank runs in Canada at Home Trust in April because of a fear of their lending practices in the now, by all appearances, deflating property bubble in Canada. Between April 19-24 the bank was close to collapse and had to be bailed out with billions to be able to meet redemption requests from depositors. In Canada they are still practicing bailouts I guess.
 
In Spain, the first real test of bail-ins appears to have taken place as Banco Popular from Spain was bailed-in. For those of you who are unaware of what a bail-in is, it allows for the value of a bank to be virtually liquidated so that the taxpayers are no longer on the hook for investment and other losses.
 
The good news here is that it appears that depositors were spared in this episode of “payoff the bankers” but anyone holding debt or equity securities of the bank have been wiped out. 3.6 billion Euros of emergency funding were blown through in around 24 hours just to meet redemption requests.
 
According to Imad Barake of Seeking Alpha the bank had almost 21 billion euros in net non-performing assets while its entire market capitalization was 3.86 billion euros.
 
After trying to find another bank to buy the assets of Banco Popular the princely sum of 1 Euro was paid for Banco Popular by Banco Santander. They are said to need to raise $7 billion euros to reinforce the balance sheet of former Banco Popular. This will likely involve a new stock and/ or bond issue based upon the “strength” of Santander. It appears to me that this deal could significantly undermine the buyer’s solvency.
 
It appears to me that this is a case of kick the can down the road yet again. Minor pain is inflicted on “investors” and the general public can still remain in the dark about how the bail-in can really work with liabilities of the bank- including deposits disappearing just like the equity of stock and bondholders in this case. Don’t get me wrong- anyone with a large position here got hurt badly but all the signs were there. These people, in my opinion, were nothing more than speculators and they bet wrong. I would feel MUCH differently if deposits had been involved- most have no idea of the risks they are taking there as they believe in the powers that be to protect them.
 
By the way- how many stories did you see in the MSM about this? It doesn’t quite fit in with the “all is ok- nothing to see here” story does it?
 
Many will say- yeah but that is all overseas. That will actually be good for US stocks. I say- not for long.
 
The US economy is picking up steam- in the wrong direction- as virtually all of the economic numbers are falling at the same time.
 
Manufacturing- down, sales down, store closings- up, auto sales- down, auto inventories (unsold) up.
 
Debt at all-time records and rising at an unsustainable pace to keep the illusion of normalcy.
 
According to an article in ZeroHedge “State Corporate tax receipts just crashed the most since the recession”. In the article, according to the Congressional Budget Office, US federal income tax receipts have come in at 3% below expectations for this year. This is a number that they will have a hard time massaging. You can’t just use birth/death rate models that make job creation look like you want it to. You can’t just ignore the chronically unemployed- these are tax receipts. They come in or they don’t.
 
In my opinion anyone who is looking at the stock markets for a sense of how the economy is doing is looking in the wrong place. In reality the “markets” should no longer be called markets because markets generally mean people buy and sell goods to each other while this “market” has become a gambling casino for the top 1% of the 1%. It appears that anything goes with no apparent rules for them- but plenty for us.
 
It appears “Money” is “printed up” and assets are bought not based upon fundamentals or company prospects but by what the authorities want to buy. Of course, all sorts of bond buying is taking place to keep the bond yields low so the debt will not implode and governments everywhere can keep increasing the debt that they are encumbering us and future generations with.
 
Anyone who is surprised when this charade is exposed and starts talking about “black swans” and how we couldn’t possibly have seen this coming- don’t buy it! The signs seem to be everywhere. They are being exposed one after another while the financial game shows have excuses and talking points for why this or that has happened- by the way- always BUY!
 
If there was ever a time to pay as much attention to what is happening everywhere politically, financially, etc. that time is now. I believe your financial future depends upon it.
 
Be Prepared!
 
Mike Savage, Financial Advisor
2642 Route 940 Pocono Summit, Pa 18346
(570) 730-4880

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